March 17, 2020
Coimbatore, Mar 16 : Tirupur Exporters’ Association (TEA) Monday requested Finance Minister, Nirmala Seetharaman to announce financial measures including one year moratorium for repayment of loan to rejuvenate the economy and business confidence of the exporting units to offset the impact of Coronavirus.
In a letter to the minister, TEA president, Raja M Shanmugham requested to take a proactive step and immediately advice the banks not to categorize the units as NPAs for non repayment of loan and provide at least one year moratorium, which will help the units, particularly MSMEs to sustain in the business.
The stimulus financial package measures are also required to re-energise the market economy and a quantitative easing methodology is required at this hour of crisis to revive back the economy and uplift the business confidence, he said.
Stating that the European buyers, particularly from Italy and Spain have already asked TEA members not to export the garments to them and wait for minimum one or two months till the situation resume normalcy and the shops are reopened, the letter said that some of the buyers are even cancelling the orders also and more importantly, the buyers are differing the payment against the promise for already sent the goods also and not lifting the goods.
The cause of concern is that the production activities have been continuously taking place to fulfill the committed orders and deliver in time and the disruption at this crucial juncture is causing a huge impact on the financial part of the units.
The protection planning of the units have gone for topsy-turvy, and in the current scenario, the units, particularly MSMEs would not be in a position to repay the loan to the banks,m Raja Shanmugham said.
“We apprehend that due to non clearance of dues, the banks may straight way classifying the units as NPAs as per BASEL norms.In addition to this, the dyes and chemicals prices have gone up by about 30 per cent which will impact cost of production also,” the letter said.
To overcome the disruption in the economic activity caused by Coronavirus (COVID-19), many developed countries like USA, including China have already taken a slew of financial measures like reduction of Bank interest rates and Cash reserve, Debt moratorium provided to MSMEs, deferment of loan and tax payment without interest including announcement of new Bridge loansand Credit guarantees also, he said.